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The Dorilane Company produces a set of wood patio furniture consisting of a table and four chairs. The company has enough customer demand to justify
The Dorilane Company produces a set of wood patio furniture consisting of a table and four chairs. The company has enough customer demand to justify producing its full capacity or 3,900 sets per year. Annual cost data at full capacity ollow: $93,000 $97,000 $74,000 $ 20,000 $61,000 $ 7,000 2,000 Direct labor Advertising Factory supervision Property taxes, factory building Sales commissions Insurance, factory Depreciation, administrative office equipment Lease cost, factory equipment Indirect materials, factory Depreciation, factory building Adninistrative office supplies (billing) Adninistrative office salaries Direct naterials used (woad, bolts, $11,000 $ 21,000 $102, 000 6, 000 $113, 000 428,000 utilities,factory $47,000 L Enter the dollar amount of each cost item under the appropriate headings. Note that each cost item is classiied in two ways: first, as variable or fixed with respect to the number of units produced and sold; and second, as a selling and adm nstrative cost or a product cost. (Ir the item is a product cost, it should also be classified as elther direct or Indirect. 2. Compute the average product cost of one patio set. 3. Assume that production drops to only 1,000 sets annually. Would you expect the average product cost per set to ncrease,decrease, or remain unchanged? Required Required Required Enter the dollar amount of each cost item under the appropriate headings. Note that each cost item is classified in two ways: first, as variable or fixed with respect to the number of units produced and sold; and second, as a selling and administrative cost or a product cost. (If the item is a product cost, it should also be classified as either direct or indirect.) Cost Behavior Product Cost Cost Itenm Variable Fixed Direct Indirect Direct labor Advertis ng Property taxes, factory buildin Sales commissions Insurance, f office Lease cost, factory equipment Ind rect materials Depreciation, factory building Administrative office supplies Administrative office salaries Direct materials used (wood, bolts, eto Utilities Total costs Required 1 Required 2
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